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IAG/Aer Lingus

Old 18th Dec 2014, 16:07
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IAG/Aer Lingus

It seems Aer Lingus has rejected a takeover bid by IAG:
BBC News - Aer Lingus rejects takeover bid by BA owner IAG
I'll bet they will be back.
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Old 18th Dec 2014, 16:21
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Being reported this side of the ditch too.

Aer Lingus rejected IAG takeover approach on value terms

IMHO, it seems IAG are just looking for more Heathrow slots. I cannot see any other business case for EI existing within the IAG stable.
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Old 18th Dec 2014, 16:36
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Suspect Walsh is worried at the recent developments at EI and how they are impacting on BA. Just geos to show that the big 3 European carriers can't compete with many carriers because of their cost bases!

He is not that stupid to make a bid purely for LHR slots as he knew they would be off the table straight away.

He will be back!
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Old 18th Dec 2014, 18:19
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I wonder if there's an element of WW trying to fill in that chip in his shoulder. IIRC, he left EI a a very frustrated man.
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Old 18th Dec 2014, 18:36
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I would imagine that Aer Lingus being among the top three airlines transferring passengers to/from IAG, might be the reason that IAG would not want that business to go elsewhere...simple logic. Ryanair specialises in point to point sales, therefore no bias towards IAG.
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Old 18th Dec 2014, 19:14
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Yes, a lot of transfers to BA via Heathrow but also a lot to KLM and other Far Eastern airlines via Schiphol. Also Eithad and Emerites have taken business from BA since they started from Dublin.
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Old 18th Dec 2014, 20:08
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Originally Posted by Una Due Tfc
I wonder if there's an element of WW trying to fill in that chip in his shoulder. IIRC, he left EI a a very frustrated man.
I suspect that any such frustration was caused by the former Taoiseach (Prime Minister) Bertie Ahern's interference in the restructuring and planned initial public offering (IPO/flotation) of shares in the airline under WW's watch.

Ahern refuses to withdraw comment about Willie Walsh | BreakingNews.ie

I recall watching news footage on the day when Ahern stood up in the Dáil (Parliament) and denounced the Aer Lingus management for offering to purchase the company as the process was being dragged out by delaying tactics. It was pretty shocking stuff, given that it was believed that the government was actively delaying the process in order to protect votes in the constituency around Dublin Airport.

Beyond that, I still can't see a business case for IAG to purchase a small European operator such as EI. Apart from the Heathrow slots what does it add to the IAG offering? There's no large demographic catchment, no unique routes or special access arrangements. Very little, if anything by way of "synergies". Sure EI feeds some traffic into Heathrow, but IAG don't need to buy it to protect the traffic. To my mind it can only be one of two business propositions; a) to own & use the slots or b) to prevent someone else getting them. At a stretch, I suppose one could argue the case that it grows market share in Europe and is a step on the long heralded consolidation in the industry. If the model in the US is the template then it's arguable that isn't necessarily a good thing either.

JAS
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Old 18th Dec 2014, 20:23
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IAG is not the sort of organisation to make an opportunistic bid, so I assume it's done its homework.

I can see a lot of logic in utilising EI's hub in Dublin to reinforce IAG's presence on the transatlantic market.

That said, IAG should really also be looking to boost its presence in markets where it is relatively weak (Asia for example).
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Old 18th Dec 2014, 20:36
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Ha bet none of you saw that one in the hold over Dublin!! EI part of IAG well whowould have thought. Willie could yet have the last laugh....
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Old 18th Dec 2014, 20:56
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I thought Lufthansa might have been more interested than IAG, they have the second highest number of slots at LHR don't they? AF/KLM have far too many problems to be interested in adding to that crumbling empire.

The recent success of EI is built on Trans Atlantic connections, a huge chunk of which is from the UK regions. IAG, particularly BA must have been looking on for the last 2 years or so with annoyance. Putting a stop to that before it becomes a true threat combined with 24 LHR slot pairs a day pays for itself in the long run from their point of view
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Old 18th Dec 2014, 21:05
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The recent success of EI is built on Trans Atlantic connections, a huge chunk of which is from the UK regions. IAG, particularly BA must have been looking on for the last 2 years or so with annoyance. Putting a stop to that before it becomes a true threat combined with 24 LHR slot pairs a day pays for itself in the long run from their point of view
To some extent that is in BA/IAGs own hands - people have been shafted too often by domestics being dropped at the whiff of problems at Heathrow meaning the connecting TA is missed westbound, or an uncomfortable wait at LHR or slow coach journey as a "reward" for using London Airways coming East. Add in US pre-clearance, and EI offer quite a few advantages for the GB regions.

That said, the offer may be more a strategic attempt to warn off the airline that may not be mentioned on PPRuNe....
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Old 18th Dec 2014, 21:17
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There are actually loads of permutations....here are some random thoughts in no particular order...

- AL flies 330/350 wide bodies on lhr route at peak times only releasing slots for BA longhaul
- AL feeds into LHR and services UK regions for BA just as it has for Little Red. BA then turns a profit on regional due to the significantly low cost base which AL has
- AL takes over Lgw routes utilising it's lower cost base and again makes loads of profit
- Some BA or AL flagged aircraft fly lhr/dub then onto US utilising CBP facilities
- big cull of back office staff/middle management at AL as no longer needed once integrated into BA which in turn generates huge underlying profitability
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Old 18th Dec 2014, 21:32
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The recent success of EI is built on Trans Atlantic connections, a huge chunk of which is from the UK regions

BA only serve 6 UK airports now...

PS less than half that served from Manchester

PPS If you have a half empty 777 coming in from JFK and say 4 pax or 5 tfr to Stavanger or Gothenburg maybe its time to worry !
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Old 18th Dec 2014, 22:03
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There are actually loads of permutations....here are some random thoughts in no particular order...

- AL flies 330/350 wide bodies on lhr route at peak times only releasing slots for BA longhaul
- AL feeds into LHR and services UK regions for BA just as it has for Little Red. BA then turns a profit on regional due to the significantly low cost base which AL has
- AL takes over Lgw routes utilising it's lower cost base and again makes loads of profit
- Some BA or AL flagged aircraft fly lhr/dub then onto US utilising CBP facilities
- big cull of back office staff/middle management at AL as no longer needed once integrated into BA which in turn generates huge underlying profitability
BA could fly their wide bodies to LHR at peak times and make better use of their slots but the simple fact when they are beginning flights to Greek islands it shows they have way to many slots currently.

Vueling is part of the group so if LGW is such a problem they could take it over.

It will never happen and I am not even sure FR would support such a move.

Not sure they would like Aer Lingus and Vueling under the same management.
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Old 18th Dec 2014, 22:20
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BA moving their LGW 777s to LHR to use EI's slots, EI doing BA's sun and fun routes from LGW with A330s/50s, with a few left in DUB for JFK, BOS and ORD, just like the 747 days. I think you've found a big motive of BA's MCDU!
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Old 19th Dec 2014, 00:41
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There are actually loads of permutations....here are some random thoughts in no particular order...

- AL flies 330/350 wide bodies on lhr route at peak times only releasing slots for BA longhaul
- AL feeds into LHR and services UK regions for BA just as it has for Little Red. BA then turns a profit on regional due to the significantly low cost base which AL has
- AL takes over Lgw routes utilising it's lower cost base and again makes loads of profit
- Some BA or AL flagged aircraft fly lhr/dub then onto US utilising CBP facilities
- big cull of back office staff/middle management at AL as no longer needed once integrated into BA which in turn generates huge underlying profitability
Indeed, can see the sense in IAG acquiring EI.

Isn't EI partly owned by its employees?


BA only serve 6 UK airports now...
11 UK airports: ABZ, BHD, EDI, GLA, JER, LBA, LCY, LGW, LHR, MAN, NCL.

BA could fly their wide bodies to LHR at peak times and make better use of their slots but the simple fact when they are beginning flights to Greek islands it shows they have way to many slots currently.
BA now has over 50% of all LHR slots having acquired BD. Only a handful of the former BD slots have been used for long haul (only a few new routes: AUS, CTU, ICN, KUL).

Apparently the split of the acquired BD slots was going to be one-third longhaul/two thirds shorthaul, but there is, allegedly, a shortage of suitable longhaul aircraft. There may be a few more slots (9 slot pairs?) coming down the line from VS in 2015.

Having seen the asset-stripping of BD slots by LH from the sidelines before 2012, acquiring EI may have more to do with preventing the same being done to EI by another carrier rather than BA doing it.

Last edited by Fairdealfrank; 19th Dec 2014 at 01:13.
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Old 19th Dec 2014, 07:07
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11 UK airports: ABZ, BHD, EDI, GLA, JER, LBA, LCY, LGW, LHR, MAN, NCL.
Maybe. However, I think the posters comment was in relation to EI's success in attracting TA transfer traffic via Dublin as opposed to BA via LHR. Three of those are London, so that's 8 regional airports. Maybe the poster excluded BHD and JER as they are not GB. That leaves 6. The point still stands that BA are no longer the "national" airline for the UK, or first choice for TA from the regions given other airlines direct flights and an increasing availability of pre-cleared transfers at Dublin. Hence my occasional moniker for them as "London Airways", as I don't think there are ANY BA flights which do not serve London these days (South African Comair franchise excluded).
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Old 19th Dec 2014, 07:15
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They only connect to 6 .....from Heathrow !

Manchester, Leeds, Newcastle, Glasgow , Edinburgh and Aberdeen.

My point was very much about BA connectivity from the UK regions to Heathrow !


(...thats of course when its not foggy, snowing or somebody forgets to put a shilling in the meter at Swanwick)
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Old 19th Dec 2014, 07:35
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If (and it would seem unlikely) IAG were to be able to acquire Aer lingus, and retain all those LHR slots, then I guess is they'd slim down the Dublin transatlantic operation, and use the newly acquired LHR slots to add yet more capacity to the London / USA routes. I can also see BA using EI as a feeder operation to their LHR hub mainly, and cutting down massively on direct DUB - mainland Europe destinations, treating Dublin as it does Manchester, Glasgow and Edinburgh.

This would not result in UK regional passengers trudging down to LHR to fly with BA, but surely to drive more regional PAX into the hands of KL / LH and of course Icelandair.

However, I really can't see the UK or EU competition authorities allowing IAG to get away with retaining all of the EI slots at LHR were any such takeover to go ahead and I can't see the Irish government being overjoyed with potentially losing their "national flag carrier" and perhaps direct services to their main (EU) trading markets.
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Old 19th Dec 2014, 07:55
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I can also see BA using EI as a feeder operation to their LHR hub mainly, and
cutting down massively on direct DUB - mainland Europe destinations, treating
Dublin as it does Manchester,
Dublin has a bouyant market. If BA opted to channel traffic via London, which I cannot see, the likes of LH would step up FRA, and other carriers would step in, FR would just expand. Lets not forget Willie Walsh will be keep to see AerLingus prosper and grow.

I am see this move by BA as very positive indeed. WW has always said that they wouldn't touch it until the pension position was under control. So that may be in sight!
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